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  5. CJT: Hi 5i How do you view FDX earnings, it is down today over 10%. [Cargojet Inc. Common and Variable Voting Shares]
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Q: Hi 5i
How do you view FDX earnings, it is down today over 10%....
Would you consider this drop an opportunity for 1-2 year horizon and why?

Not sure about this but Would CJT be considered a proxy, its down today also.. what is your opinion on this one...opportunity or no.

Thx
Asked by jim on December 20, 2023
5i Research Answer:

FedEx reported another mixed bag in fiscal 2Q. Freight share gains from Yellow's July bankruptcy and volume diverted from UPS appear to have been mostly sticky. Less-than-truckload shipments per day fell 5.1%, about 110 basis points better than expectations. The consolidation that occurred after Yellow's failure has been a net positive for rates, which were up 7% from last year.  LTL pricing should rise by mid-single digits over the next 12 months ex-fuel surcharges. Express came in well below consensus as volume was weaker than management's initial outlook, which carried a heavier cost base. FedEx also announced a new restructuring of its air network, hoping it will lead to improved utilization and margins as part of its DRIVE initiative. EPS missed estimates by 4% and sales missed by 1%. Analysts are worried about weaker profitability in  its air division, which is far more costly to operate. The stock is still up 44% even with today's decline. It is cheap at 14X earnings. It is still expected to show good growth over the next two years. Overall, we would call it a disappointment and not a disaster. We think it is buyable on valuation and growth, but are big believers in momentum, and would wait for this to settle in for a few weeks before stepping up. CJT is an approximate proxy and has already reported earnings (comments in the Q&A). It is riskier and also far more expensive than FDX, and FDX looks better to us right now. 

Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in FDX.